HMV Reinvigorated as it Unveils New Digital Strategy

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HMV recently embraced a new multi-channel strategy in an attempt to capture a higher share of the digital music market, but the re-launch had some bumps.

Digital now accounts for around a quarter of the U.K. music market and grew by 11.4 percent last year, according to figures from the U.K Entertainment Retailers Association. HMV’s new app was launched for iOS and Android devices in October, only to be removed from Apple’s app store four days later with “no explanation” according to HMV owner Hilco. Although neither side has confirmed the reason, it has been reported that the app violated a clause preventing the selling of goods or services outside of the app. The issue is likely to be linked to the app’s download manager, which HMV boasted “seamlessly integrates purchases into the user’s existing iTunes library.”

Linking in-store, online experiences
A unique selling point of the HMV app is that it aims to link the in-store and online experience with sound and image search functionality. This means that customers browsing music in HMV’s stores can scan a CD cover to locate a digital version of the same content or use the app to identify music being played and download it.

The challenge HMV faces will be marketing its stores, in combination with its new app, as a destination for customers and persuading them to change how they source music. Many shoppers have become accustomed to the habit of automatically searching iTunes or Amazon when looking to download digital music. Music streaming services like Spotify also pose a significant obstacle — particularly among younger customers, which is the group that HMV is targeting.

A major factor in determining the ultimate success of HMV’s digital strategy will be pricing. If HMV and provider 7digital are able to match iTunes and Amazon on price, some customers may be persuaded to switch allegiances.

Stores remain the differentiator
The other threat to HMV’s digital strategy — and HMV’s business in general — is Amazon’s AutoRip music bundling service, which offers customers a free MP3 download of eligible CD and vinyl purchases, bolstering usage of Amazon’s Cloud Locker functionality.

Planet Retail believes that AutoRip will be popular with customers and is likely to help strengthen Amazon’s market share within the entertainment sector. As digital music matures, bundling is a key area on which retailers like HMV will need to focus in order to compete.

HMV’s major weapon against Amazon and iTunes should be its multi-channel approach, particularly using its physical stores as a key differentiator. The company has started to implement this strategy with a striking and well-received makeover of its flagship store on London’s Oxford Street and fresh branding reflecting its long-standing musical heritage. HMV has also landed high-profile in-store guests, beginning with Paul McCartney, who appeared in the Oxford Street store to sign copies of his new album. All of this will help to generate a buzz and increase awareness of HMV’s relaunch.

HMV relaunched its website at the end of October with a “new, content-rich environment” for customers, providing another much-needed boost. It certainly won’t be easy competing with the big boys, but HMV looks to be taking steps in the right direction.